Title : Should Bangladesh join Regional Comprehensive Economic Partnership (RCEP)? The Gravity Explanation of Bangladesh Dilemma

Authors : Gour Gobinda Goswami1, Farhan Khan, Kazi Labiba, Farhanaj Achol, Tapas Kumar Saha, Aunanna Zulfikar

Abstract : The scope of this work is to explore whether RCEP would be beneficial to Bangladesh, given her strong ties with India and the west. Using extended Gravity equation and data from Head and Mayer (2021) and the Direction of Trade Statistic (IMF, 2021) for Bangladesh with her applicable partner countries from 1972 till 2019, we attempted to examine the potential impact of joining RCEP while keeping her relationship with SAARC, and other existing economic integration schemes intact. Using traditional Pooled OLS, Fixed-effects, 2SLS, and GMM techniques, it has been revealed that conventional partners in the South led by India are still beneficial to Bangladesh's trading line. Joining RCEP provides ample avenues for trade expansion without replacing the positive effects of SAARC and BIMSTEC. Traditional partners from European, American, and South Asian trading opportunities are still paying enough dividends to Bangladesh. RCEP is providing a trade-enhancing chance for Bangladesh in the eastern direction. This paper provides a policy suggestion to look east policy of the Government. A total overhaul of her tax structure through minimizing excessive reliance on import tariff revenue is desired to facilitate her to join RCEP in the future. This is the first and the only study which explores the feasibility of Bangladesh joining the Regional Comprehensive Economic Partnership by using the most recently updated Gravity Data in a panel framework.

Journal : International Journal of Emerging Markets Volume : Year : 2022 Issue :
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